What is the impact of problem loans on Japanese bank productivity growth?. Issue 2 (5th March 2019)

• Record Type: Journal Article
• Authors: Mamatzakis, Emmanuel; Matousek, Roman; Vu, Anh Nguyet
• Other Names: Chatziantoniou Ioannis guestEditor.; Hasan Iftekhar guestEditor.; Pasiouras Fotios guestEditor.
• Is Part Of: Financial markets, institutions and instruments. Volume 28:Issue 2(2019)
• Page Start: 213
• Page End: 240
• Publication Date: 2019-03-05
• Subjects: bank productivity -- bankrupt loans -- cluster analysis -- Japan -- restructured loans -- D24 -- G21 -- C33; Financial services industry -- Periodicals; Securities industry -- Periodicals; Financial instruments -- Periodicals; Financial institutions -- Periodicals; 332.105
• DOI: 10.1111/fmii.12112
• Languages: English
• ISSNs: 0963-8008

Abstract

Abstract: This paper examines for the first time the impact of problem loans on Japanese productivity growth. We exploit a new data set of Japanese problem loans classified into two categories: bankrupt and restructured loans. We opt for a novel and flexible productivity growth decomposition that allows to measure the direct impact of these problem loans on productivity growth. The results reveal that Japanese bank productivity growth was severely constrained by bankrupt and restructured loans early in 2000s, whilst some persistence of the negative impact of problem loans on productivity growth is observed in the late 2000s. Thereafter, there is only some partial recovery in the productivity growth from 2012 to 2015. Further, we also perform cluster analysis to examine convergence or divergence across regions and over time. We observe limited convergence, though Regional Banks seem to form clusters in some regions.